Integrating Pricing and Inventory Control: Is it Worth the Effort?

BuR Business Research Journal, Vol. 1, No. 1, May 2008

19 Pages Posted: 21 Jan 2009

See all articles by Lisa Gimpl-Heersink

Lisa Gimpl-Heersink

affiliation not provided to SSRN

Christian Rudloff

affiliation not provided to SSRN

Moritz Fleischmann

University of Mannheim, Business School

Alfred Taudes

affiliation not provided to SSRN

Date Written: January 20, 2009

Abstract

In this paper we first show that the gains achievable by integrating pricing and inventory control are usually small for classical demand functions. We then introduce reference price models and demonstrate that for this class of demand functions the benefits of integration with inventory control are substantially increased due to the price dynamics. We also provide some analytical results for this more complex model. We thus conclude that integrated pricing/inventory models could repeat the success of revenue management in practice if reference price effects are included in the demand model and the properties of this new model are better understood.

Keywords: Inventory Management, Pricing, Reference Price, Stochastic Demand Model

Suggested Citation

Gimpl-Heersink, Lisa and Rudloff, Christian and Fleischmann, Moritz and Taudes, Alfred, Integrating Pricing and Inventory Control: Is it Worth the Effort? (January 20, 2009). BuR Business Research Journal, Vol. 1, No. 1, May 2008. Available at SSRN: https://ssrn.com/abstract=1330424

Lisa Gimpl-Heersink (Contact Author)

affiliation not provided to SSRN ( email )

Christian Rudloff

affiliation not provided to SSRN ( email )

Moritz Fleischmann

University of Mannheim, Business School ( email )

University of Mannheim
P.O. Box 10 34 62
Mannheim, 68131
Germany

Alfred Taudes

affiliation not provided to SSRN ( email )

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